George Irvin, University of London (SOAS) Britain’s Slumponomics 22/12/2015 1

UK’s Crisis n Three aspects:  Government budget NOT like a household budget  Why cuts weren’t necessary  Austerity isn’t working---reverse the cuts; we need growth!  and … we need equality 2

UK growth x

Myths of Thatcherite economics n Public borrowing not a ‘burden on future generations’ n Govt borrows mainly from its own private sector (80%) n If I hold a gilt, it’s an asset for me, not a liability u Cause of crisis: Govt borrowed from public to ‘bailout’ the banks u Rich hold the assets u poor suffer the cuts in public spending

Crisis caused ▲public debt (not the other way round!) Year Fiscal balance as % GDP BE DE FR GR IR PT SP UK

Lies, damn lies & stats … How debt measured? n Gen Govt Gross debt (red) includes u public bonds held by govt itself u financial interventions n Govt Net Debt (blue) is only: Public debt held by private sector net of interventions NB: Public liability = Private Asset  In 2008/09, UK net debt smaller than 60%! in 2010 net Govt debt < 60%

UK Austerity isn’t working

8 Longer than ‘Great Depression’ source : black dot: NIESR prediction for end of current recession This is longer depression than 1930 (NIESR): may not end before 2015 We are here Recovery up here

Cutting Govt spending doesn’t work

10 Unfair income distribution in UK In 1970 ratio of average workers wage to avge CEO pay was about 40:1 Source: Compass High Pay Commission (2011)

 Growing inequality is the real problem in the UK! 11 Rise in UK Gini coefficient for gross household since 1979; (wealth GINI far worse) Selected 2008 Ginis: USA0.41 UK 0.36 France0.33 Germany0.28 Denmark0.25 Sweden0.23 Source: Hills Report (2009)

Osborne’s ‘austerity’ n Notion that Britain needs public austerity to promote growth is unfounded and incoherent! n ‘Going for growth’ means adopting large state-led investment stimulus package. n Create jobs; green the economy; finance through combination of QE, FTT (now adopted by DE, FR) and reducing tax evasion n ‘Tax gap’ (evasion by persons & companies) now costs us £25bn a year n Balls at last getting away from ‘cut slower’ argument and focussing on grown

conclusion THE END (is nigh?)